China defends trade with U.S. as Trump set to brand it a competitor

Asian Stock Markets

China’s Foreign Ministry on Monday defended trade with the United States as a win-win scenario ahead of a speech by U.S. President Donald Trump laying out a new national security strategy that makes clear that China is a competitor. 

Trump has praised Chinese President Xi Jinping while also demanding that Beijing increase pressure on North Korea over its nuclear programme and changes in trade practices to make them more favourable to the United States.

Chinese Foreign Ministry spokeswoman Hua Chunying said she was unable to comment on the strategy until it was unveiled.

But in principle, China hopes the strategy can play a constructive role in promoting world peace and stability and promoting China-U.S. strategic mutual trust, Hua told a daily news conference.
The essence of China-U.S. trade and economic ties is mutually beneficial and win-win, directly and indirectly supporting 2.6 million U.S. jobs, she added.

In 2015, the profits of U.S. firms that invested in China reached $36.2 billion, and China will continue to support trade and investment liberalisation, Hua said.

That was in the interests of both sides and the expectation of the international community, Hua said. 

The national security strategy to be rolled out in Trump’s speech, should not be seen as a bid to contain China but rather to offer a clear-eyed look at the challenges it poses, said U.S. officials who spoke on condition of anonymity.

Trump made his first visit as president to China last month, where he lauded his meetings on trade and North Korea as “very productive”.

Washington has refrained from pushing harder on trade because it needs China’s cooperation on North Korea, though Xi, at least in public when Trump was in Beijing, went no further than reiterating China’s determination to achieve denuclearisation through talks.

China and the United States have also repeatedly clashed over trade issues, including state support for Chinese firms and intellectual property rights violations in China.

On Friday, China’s finance ministry said it would cut export taxes on some steel products and ditch those for sales abroad of steel wire, rod and bars from Jan. 1, stirring concern in the United States and
Europe that the world’s top steel producer may be looking to sell its excess product abroad.

It follows a ministerial level G20 meeting in Berlin last month, where China and the United States remained at odds over how to tackle excess steel capacity. The global steel sector is worth about $900 billion a year.

Asia markets close mixed as sell-off in Chinese stocks eases

Asian Stock Markets

Asian markets closed mixed on Friday, following a quiet overnight trading session with U.S. markets closed for the Thanksgiving holiday. Chinese stocks ended the week more than 1 percent lower after a heavy sell-off in the previous session.

Japan's Nikkei 225 reversed early losses to close up 0.12 percent at 22,550.85 as markets reopened for trade after a day off. Losses were seen in automakers and manufacturing names. Technology stocks were a mixed picture: Nintendo rose 3.55 percent, SoftBank Group gained 1.4 percent and Sharp was down 1.26 percent by the end of the day.

Across the Korean Strait, the Kospi tacked on 0.28 percent to end at 2,544.33, with tech heavyweight Samsung Electronics gaining 0.29 percent. Financials drifted slightly lower.

Down Under, the S&P/ASX 200 shed 0.06 percent to close at 5,982.55. The industrials and information technology sub-indexes fell 0.42 percent and 0.74 percent respectively by the end of the session.

In China, the benchmark Shanghai Composite eked out gains of 0.06 percent to close at 3,353.82 after trading in negative territory earlier in the day. The index finished the week 1.14 percent lower. The Shenzhen Composite meanwhile lost 0.09 percent to end at 1,922.72, closing the week down 2.5 percent. The blue-chip CSI 300 index, which suffered its largest one-day fall since June 2016 on Thursday, closed higher by 0.04 percent after choppy trade.

Insurers closed mostly lower, although banks and brokerages finished the session mixed. Airlines finished the session with significant gains, with China Eastern Airlines rising 4.98 percent on the day.

A combination of tighter rules for online micro-lenders and firmer bond prices were seen as reasons for the declines on Thursday. Stocks hit by the recent sell-off had in fact risen in the past weeks and still boasted relatively good fundamentals, according to market watchers. "There was panic selling in the market," said Ronald Wan, chief executive at Partners Capital International.

Hong Kong's Hang Seng Index fared better in comparison, climbing 0.54 percent by 3:25 p.m. HK/SIN after closing 1 percent lower on Thursday. Still, the index remained below the 30,000 mark that it topped for the first time in a decade earlier this week.

China second quarter GDP growth tops forecasts on strong investment, consumption

China's economy grew faster than expected in the second quarter as industrial output and consumption picked up and investment remained strong, though analysts expect slower growth over the rest of the year as policymakers seek to reduce financial risk.

The economy grew 6.9 percent in the second quarter from a year earlier, the same rate as the first quarter, the National Bureau of Statistics said on Monday. Analysts polled by Reuters had expected the economy to expand 6.8 percent in the April-June quarter. 

On a quarterly basis, growth picked up to 1.7 percent from 1.3 percent in the first quarter, in line with expectations. 

Strength in retail sale and industrial output data helped offset a weak start for China stocks, which may have been linked to talk of tighter financial regulations. 

Growth in China's economy this year has beaten expectations as exports recover and property construction remains strong, though many analysts expect the world's second-largest economy to lose steam later in the year as policy measures to rein in red-hot housing prices and a rapid build-up in debt take a greater toll on growth. 

"Overall, the economy continued to show steady progress in the first half...but international instability and uncertainties are still relatively large, and the domestic long-term buildup of structural imbalances remains," the statistics bureau said in a statement with the data. 

China's factory output grew 7.6 percent in June from a year earlier, the fastest pace in three months, while fixed-asset investment expanded 8.6 percent in the first six months of the year, both beating forecasts. 

Retail sales rose 11.0 percent in June from a year earlier, the fastest pace since December 2015 and beating analysts' expectations for a 10.6 percent rise.

'A' shares get MSCI nod in landmark moment for China's markets

China's stocks took a major step towards global acceptance on Wednesday, finally winning a long campaign for inclusion in a leading emerging markets benchmark, in what was seen as a milestone for global investing. U.S. index provider MSCI said on Wednesday Hong Kong time it would add a selection of China's so-called "A" shares to its Emerging Markets Index after having rejected them for three years running.

Inclusion in the index marks a key victory for the Chinese government, which has been working steadily over the past few years to open up its capital markets, investors said.

Traders said MSCI's widely-expected "Yes" decision had been largely priced in, with the announcement triggering some profit-taking in blue-chips, which are no longer cheap after strong rallies this year.

Shanghai shares opened just 0.3 percent higher, and turning negative shortly after opening.
MSCI has been in discussions with Chinese regulators and global investors for four years over whether to add yuan-denominated shares to the Emerging Markets Index – tracked by around $1.6 trillion in assets – but excluded them because of restricted access to China's equity markets.

On Wednesday, the company said China had made enough progress in opening up its markets for MSCI to add a selection of 222 large-cap stocks.

The stocks, which would represent a weighting of just 0.73 percent in the benchmark, will be included via a two-phase process in May and August next year.

The move will see around $17 billion to $18 billion of global assets move into Chinese stocks initially, MSCI executives told reporters on Wednesday, adding that over the long-term the full inclusion of the China market could see more than $340 billion of foreign capital flow into the country.

Sebastien Lieblich, global head of index management research at MSCI declined, however, to provide a likely timeline for the full inclusion of "A" shares, saying it would depend on continued progress on China's reform agenda.

MSCI, he noted, would like to see China further relax controls on repatriating capital out of the country, and act to curb frequent share suspensions.